Wednesday, January 8, 2014

Two Apple v. Motorola cases involving FRAND issues are currently on appeal before the Federal Circuit. The higher-profile one of these matters, the "Posner case", was heard in September. An appellate ruling on that one will probably come down very soon, and Apple will probably win this based on how the hearing went (Chief Judge Rader twice called Motorola's royalty demands for a single standard-essential patent "crazy"). There is also a second, lesser-watched but nonetheless interesting Apple-Motorola FRAND appeal: the cross-appeal of the dismissal without prejudice (in November 2012) of a FRAND contract case Apple brought in the form of counterclaims to Motorola's ITC complaint.

It's technically a cross-appeal, but it's mostly about Apple's efforts to revive its bid for a FRAND determination in district court. Google's Motorola wants the dismissal without prejudice to be converted into a dismissal with prejudice, which would preclude Apple from bringing another case of this kind against Motorola.

While I strongly doubt that it was a good idea for Google to pursue a cross-appeal in the Oracle Android-Java copyright case, it makes sense in this Apple case. Even if Google's push for a dismissal with prejudice is rather ambitious (the district judge originally wanted to dismiss the case with prejudice as well, but then realized that this would have gone too far), it means Google now had the last word at the briefing stage. Here's Google's reply brief, filed earlier this week (this post continues below the document):

I'm not going to go into much detail here. Late last year I commented on Apple's reply brief and said that Google's policy arguments against FRAND rate determinations in situations in which defendants don't commit to take a license on court-determined terms might be viewed favorably by the Federal Circuit, though policy considerations won't matter if Wisconsin law simply entitles Apple to such a rate-setting decision.

Google reinforces some of its key arguments in its reply brief. As for the specific issue at the heart of its cross-appeal -- whether the dismissal should be one with prejudice -- I'm actually not that impressed by what Google says. In support of its request for a dismissal with prejudice, it particularly stresses a Federal Circuit opinion on a patent infringement case (Automotive Technologies v. BMW et al.) in which the patentee sought a very broad claim construction, based on which the district court found that the patent was invalid for lack of enablement based on that broad scope. While this is a case in which a plaintiff's own tactical decision turned out unwise, it's far from establishing a general rule of the "you make your bed and then you lie in it" kind. The non-practicing entity in that automotive case prevailed on its proposed claim construction. That, in turn, upped the ante on the enablement side, and broke the patent's neck. The Federal Circuit pointed to a different case it had previously decided and notes the irony in this: "The irony of this situation is that Liebel successfully pressed to have its claims include a jacketless system,
but, having won that battle, it then had to show that such a claim was fully enabled, a challenge it could not meet." A party can't later appeal the claim construction it (successfully) proposed. It then has to defend the validity of the patent based on that claim construction, and the broader the scope of the patent is, the more susceptible it is to challenges. Apple's decision not to commit unconditionally to a license on court-ordered terms is not comparable to a claim construction proposal, and even if it were, there's really no comparable situation in the Wisconsin FRAND case in terms of Apple having prevailed on a particular proposal that later resulted in the dismissal of the case. There had been some pre-trial decisions that worked out fine for Apple, but those weren't related to the question of whether it would have had to commit to a license deal on court-determined terms.

But again, Google's policy arguments are not going to be easy for Apple to overcome, and Google's reply brief states several of those in a compelling fashion.

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About Me

Florian Mueller used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.